CBI Procurement Report – recommendations

We commented recently when the CBI (the UK’s leading business organisation) published their Public Procurement Report, based on a survey of 100 of their corporate members. Let’s look at their recommendations today, presented in three groups.

Review the moratorium on accessing external skills until the public sector’s own skills gap is addressed

Continue efforts to increase access for small & medium-sized firms, but do so in a way that is consistent with the goal of securing savings and attracting external investment

Use the new Procurement Directive Regulations and training programmes to encourage a shift away from lowest-price in contract decisions towards whole-life costing and quality

Spend Matters comment - External skills can help, although they have to be applied properly and I was much taken by Gordon Murray's analysis we featured here. He suggested that outsourcing key skills - such as procurement - was not a good idea and questioned the apparent reliance on the Crown Commercial Representatives. I'm sure the CBI don't mean that external resource should be used at the expense of developing internal commercial capability, because that really should be the top priority.

The comment on SMEs is uncontentious and sensible, but the third bullet is more debatable. This belief amongst many suppliers that public buyers are overly focused on lowest cost rather than whole life costs is simply not grounded in reality in my experience. So I am directly challenging the CBI and their members on this. If they would like to (confidentially) highlight any tender they are involved in that is evaluating on a pure lowest cost basis, then I will happily feature if here and name and shame the buying organisation. I believe the truth is that many firms either don't understand evaluation, whilst others just find it more comfortable to think they have lost out on price rather than facing the reality that their bids weren't good enough.

2. Complete the radical overhaul of public sector procurement practices

The Crown Commercial Service must have control mechanisms to ensure reforms are followed and implemented across the wider public sector

Guidance and training from the Cabinet Office to all public sector contracting bodies must encourage a more consistent application of procurement guidelines

Ensure the Mystery Shopper initiative is well marketed to firms

Spend Matters comment - We're writing separately about the new Directives. We're not convinced it will mean simpler processes, but we will see. It's easy to see why the ‘consistent application of procurement guidelines’ is a good aim for the CBI, but that - and the control mechanisms point for that matter - don't sit well with the wider strategic trend for greater power for devolved bodies. Procurement strategy will and must follow business strategy. So hoping for greater commonality and standardisation when schools, hospitals, even local authorities are all pursuing more specific, local and devolved approaches is I'm afraid a vain hope. But we don’t blame the CBI for pushing that case.

However, I do think the mystery Shopper service is excellent and support the CBI here. If organisations inevitably have more local authority, then 'soft power' will be more effective than attempts at formal control. Mystery Shopper is a good example of that. I think there is much to be said for naming and shaming (in a constructive way of course) those organisations that aren't following good practice.

3. Leadership from the centre is essential for successful commercial market reform

Ensure commercial teams are involved much earlier in the policy development process

Ministers must be held accountable for the implementation of the reform programme and senior responsible offices must be more visible at key stages of major contracts

Government communications with suppliers must avoid divisive rhetoric and focus on creating competitive, accountable and transparent markets

Spend Matters comment - Hard to argue with any of these thoughts! As well as commercial teams being involved earlier, we need to see policy people having greater commercial awareness themselves. And the point about SROs has been made many times before but needs to be pushed constantly. Finally, we would expect the CBI to comment on the 'divisive rhetoric' wouldn't we, as they represent big business? But they are right to do so. Suppliers must be held to account, but we do need strong markets and suppliers, and some of the comments from Cabinet Office and elsewhere have not been constructive in this regard.

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